Neutral Info Edge India Ltd for the Target Rs. 1,380 by Motilal Oswal Financial Services Ltd
Steady 1QFY26 amid uneven hiring demand
Margins likely to be capped as marketing expenses remain high
* Info Edge (INFOE)’s standalone revenue stood at INR7.4b, up 15.3% YoY/ 7.2% QoQ, in line with our estimate of ~INR7.4b. EBITDA margin came in at 37.7% (flat QoQ/down130bp YoY), below our estimate of 40.7%. Overall billings rose 11.2% YoY and stood at INR6.4b. Adj. PAT came in at INR2.6b (below our est. of INR2.8b. In 1QFY26, INFOE’s revenue/EBITDA grew 15.3%/11.4% YoY. We expect its revenue/EBITDA to grow 13.1%/4.1% YoY in 2QFY26. We reiterate our NEUTRAL rating with a TP of INR1,380, implying a 4% upside.
Our view: Non-recruitment growth offsets recruitment moderation
* INFOE delivered a steady 1QFY26 despite a softer close to the quarter. Recruitment billings growth moderated to 9% as momentum slowed in the latter part of 1Q due to macro events, client caution, and contract deferrals. GCCs and non-tech sectors such as Retail, Healthcare, and Manufacturing, however, held up well with double-digit growth.
* We believe that the current hiring environment remains patchy. While certain sectors are showing resilience, caution persists among IT and consulting clients. Even so, niche adjacencies like IIM Jobs, Naukri Gulf, and Naukri Fast Forward remain standout performers with strong double-digit growth and should provide some comfort to this business.
* Non-recruitment businesses maintained their upward trajectory, collectively narrowing cash losses overall. 99acres sustained market share gains even in a seasonally softer quarter, driven by customer and pricing growth, with brokers and channel partners outpacing developers. The business achieved operating breakeven and generated positive cash flow, and in our opinion, the current momentum and marketing-led visibility could push the platform into decent profitability over the medium term.
* Jeevansathi continued to outperform in its niche with 36% billings growth, healthy engagement metrics, and breakeven profitability. The freemium model, coupled with AI-led product upgrades, is driving stronger user engagement and healthier monetization. Marketing expenses are being kept in check – steady at INR120–150m a quarter – allowing INFOE to pursue 20-25% growth in FY26E while holding the line on breakeven profitability.
* Margins were softer in 1Q, with IPL-linked campaigns and investments in growth businesses weighing on profitability. In our opinion, these investments, while impacting near-term margins, are aligned with INFOE’s growth strategy.
* We believe margin expansion may be limited in the near term, as growthled investments are likely to continue and are contingent on a rebound in recruitment demand. We forecast the company’s EBITDA margin at 37.8%/40.8% for FY26/FY27.
Valuations and changes to our estimates
* Our estimates are broadly unchanged. While INFOE’s businesses exhibit steady growth in recruitment and real estate, limited near-term profitability upside weighs on the outlook. In our opinion, current valuations already reflect much of the expected growth, leaving little room for re-rating.
* We value the company’s operating entities using DCF valuation. Our SoTP-based valuation indicates a TP of INR1,380. Reiterate Neutral.
In-line revenue but a miss on margins; billings rise 11% YoY
* Standalone revenue stood at INR7.4b, up 15.3% YoY/7.2% QoQ, in line with our estimates (~INR 7.4bn).
* Overall billings rose 11.2% YoY and were INR6.4b. Billings for Recruitment/ 99 Acres came in at INR4.7b/INR0.94b vs. INR4.3b/INR0.81b in 1QFY25.
* EBITDA margin came in at 37.7% (flat QoQ/down 130bp YoY), below our estimate of 40.7%. The margin contraction was due to higher advertisement expenses on a YoY basis (15.1% of revenue vs. 13.4% in 1QFY25).
* Naukri’s PBT margin was down 200bp QoQ at 52.5%, while 99acres’ PBT loss percentage increased 310bp QoQ to 16.9%.
* Adj. PAT was up 11.8% YoY to INR2.6b (below our est. of 2.8b) owing to a lowerthan-expected EBITDA margin.
Highlights from the management commentary
* Billing growth in 1Q moderated with softness in the recruitment business, while the non-recruitment businesses sustained steady growth.
* Management described the quarter as a “tale of two halves”. Solid traction until mid-May, followed by a slowdown in the latter part due to multiple macro events, heightened client caution, and deferred contracts.
* Management remains cautiously optimistic about sustaining growth in the coming quarters, subject to macro stability and a rebound in hiring demand.
* Recruitment: Billings growth moderated to 9% in Q1, while revenue growth benefited from the carry-through of earlier momentum. Elevated marketing spend was driven by IPL campaigns, database expansion in Tier 2/3 cities, and investments in smaller growth businesses.
* Real Estate: Q1 billings were resilient in a seasonally softer quarter, aided by continued market share gains and strengthened leadership. The business was operating breakeven and generated positive cash flow from operations in Q1.
* Standalone operating margin dipped in Q1 due to seasonal IPL spending and investments in emerging/growth businesses.
Valuation and view
* We expect near-term recruitment growth to remain range-bound, as macro uncertainty and client caution – particularly in IT and consulting – keep overall hiring demand muted. Management’s disciplined investments in growth businesses such as 99acres and Jeevansathi are already showing progress, and we believe these could scale meaningfully over the medium term, adding to the group’s long-term value.
* We value the company’s operating entities using DCF valuation. Our SoTP-based valuation indicates a TP of INR1,380. Reiterate Neutral.
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